International Investments

International investments or international stocks have often outperformed U.S. investments and US stocks. However, most US investors shy away from international investments because they believe the international investments are more risky than US investments. Some investors believe that international investments are too risky and/or don't perform as well as domestic stocks.

While there may be different risks associated with international investments, the truth is that international investments have often outperformed domestic stocks. Many investors remember the roaring 1990s, when U.S. stocks rose dramatically - well ahead of international investments. However, in both the 1970s and 1980s, international stocks outperformed U.S. stocks.

International market investments

Average annual returns were determined by the performances of the MSCI EAFE (European, Australiasian, Far East) Index and the Standard & Poor's 500 Stock Index (the S&P 500). The MSCI EAFE Index is a commonly used measure of the international investments stock market. The S&P 500 is a commonly used measure of the broad U.S. stock market.

Average annual stock market returns in several countries - including Finland, Spain, and Sweden - have outpaced the U.S. stock market over the past 10 years.

No one knows for sure when domestic investments or international investments will outperform the other. The only way to reap the potential rewards of both domestic stocks and international investments is to stay invested in both.